Question

Assume that you are the accountant of ABC Company. The company’s home office is in New York and it has only one branch in Boston. During 2017 the following transactions and events occurred.

Part A

1. Home office transferred $100,000 cash, $500,000 inventory (billed at cost) and other assets costing $20,000 to Boston branch.
2. Boston branch transferred to home office $20,000 cash and $10,000 inventory (recorded at cost).
3. An equipment is purchased by the home office for the branch’s usage for $80,000. Home office also pays $5000 for insurance for this asset which they allocated to branch. The home office keeps the accounting records for the equipment.

Instructions: Prepare journal entries for these transactions for both home office and branch.

Answer 1

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ANs ouurn enty in the Aook of Heme offe : Account Titte /ENplanaheg Debit Credit $620,000 Dasten nanuh ArC Cash AIC oventony Ac 450000D other asset A1C 20000 CBeing home of fre tnansferured these aosets to Bosten rtanh $20000 Cash AIL Iovertny Ac 10,000 Bostan Bnanch 30, 000 C Pein Ch and Inyentoay neived fum Belten anch $85000 Bosten Brareh AIL 85000 bank AIC (Being Payment fon eguipment purihased and nsunance of Bosten Aranch)

JoAnA entyin the Booki of Bocten Bnaneh Account Tite/EnPlanalion Дebit Credit /00000 Cash AIC $500 000 Othen asse AIC 20000 Home offe AIC $620000 neuved frem Head cfAce) CPerm these asses ane $30000 Home offce ArC CASH 420000 A1C 10০० InYenteny Art CRucash nd Inventoy ancfenn ed te ne ofAce) A1C Eqwipment $5000 Inswrante 85000 Home offce AL Cen enthy made fon payment made by Home ofhu fn eguipmend and Insunance

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